1. These are two appeals by the assessee, one against levy of penalty under Section 271(1)(c) and another against levy of penalty under Section 273(2)(a) of the Income-tax Act, 1961. Since facts involved in both these appeals are common, therefore, for the sake of convenience, these appeals are being disposed of by this consolidated order. First, we shall take up the appeal relating to penalty under Section 271(1)(c).
2. The assessee is a HUF, Shri Deepak Singh is karta of HUF. The assessee derives income from business i.e., 67% share in a partnership firm known as Varun Enterprises and income from other sources. The assessee filed original return on 30th June, 1983 declaring net income of Rs. 4,28,190 after taking into consideration deduction under Section 35CCA at Rs. 5,00,000 claimed to have been made to Ramakrishna Vivekananda Mission, Gramsewa Parishad, as per Note 4 appended to the statement of assessable income of the assessee. Later on, the assessee revised return of income on 5-11-1983 wherein he withdrew the claim for deduction under Section 35CCA/80GGA mentioning that "it has come to their notice that the person who had collected the donation on behalf of the Mission did not give the money so collected to the mission. The matter is under investigation. In the meanwhile, however, they are filing the revised return to exclude deduction for a sum of Rs. 5 lakhs claimed in the original return under Section 35CCA/80GGA". The assessee in original return had declared share of profit 67% from Varun Enterprises at Rs. 9,11,399 and also appended below a note mentioning:- The share of profit has provisionally been added at Rs. 9,11,399 in the return of income. If, however, there is any change on completion of the firm's assessment, the same will be revised.
In the revised return the assessee declared its share of profit from Varun Enterprises at Rs. 12,80,312 with the following note:- share of profit from Varun Enterprises has been adopted as per statement annexed.
Before the revised return was filed, the assessee had paid additional self assessment tax on withdrawing the claim of donation on 2-11-1983.
The Assessing Officer completed the assessment under Section 143(3) wherein he held that the assessee had made bogus claim for Rs. 5 lakhs in his original return of income to reduce the tax liability and by adopting such practice the assessee had tried to conceal particulars of his income and also furnished inaccurate particulars of such income. It was also mentioned that after the Income-tax Department conducted series of searches under Section 132 of the Income-tax Act at the premises of persons connected with the racket of making false claims under Section 35CCA in respect of certain bogus donations which never reached the genuine trust. In the present case cheques of donations have been endorsed and deposited in the account of Manav Seva Charitable Foundation which in no way was connected with the trust. It is the case of the Department that after becoming aware of searches conducted by the department and after the Income-tax Department had discovered the bogus nature of donations, the assessee revised the return on 5-11-1983. The Assessing Officer adopted the business income as declared in the revised return as share income in partnership firm Varun Enterprises subject to rectification under Section 154/155 of the Income-tax Act and simultaneously initiated penalty proceedings on the assessee for having concealed income at the time of filing of the original return. The assessee was given an opportunity of being heard and during the course of penalty proceedings the assessee was asked to explain as to why penalty should not be imposed in respect of these two items. The assessee filed its detailed submissions vide letter dated 15-5-1986 in which he has raised objections with regard to initiation of penalty proceedings pointing out that with the withdrawal of claim under Section 35CCA and revising the return and in view of rectificatory order passed under Section 154/155 of the Income-tax Act there was no offence of concealment of income. The Assessing Officer discussed the circumstances regarding the claim of the assessee for Rs. 5,00,000 as also the circumstances responsible for the variation in income of Varun Enterprises in his order at paragraph 7 of his order in which broadly he has discussed his view points. Two crossed cheques through which the donation was purportedly given were dated 19-11-1982 and 15-12-1982 for Rs. 3 lakhs and Rs. 2 lakhs respectively. They have been issued by Shri Deepak Singh. These cheques have been simply crossed in order to facilitate the diversion of the amount of cheque from Ramakrishna Vivekananda Mission to Manav Sewa Charitable Foundation. Someone signed as Murli Mohan as Manager for Ramakrishna Vivekananda Mission and this endorsement was confirmed by one Shri Vipin Mehra. The bank account of Manav Sewa Charitable Foundation was operated by Shri Vipin Mehra and Shri Prem Prakash Verma. It was further observed that Shri Vipin Mehra had no authority to collect donation on behalf of the Mission and that authority was given to Shri Vipin Mehra only on 19-12-1982. The amounts collected earlier to the date of authorisation did not reach the Mission. This was all the part of a scheme hatched to defraud the revenue. In this connection, reference was made to the statement of Shri Prem Prakash to whom the assessee claims to have handed over the cheques and it was observed that Shri Vipin Mehra was never authorised by the Mission to collect donation prior to 19-12-1982. Reference to a conspiracy by the assessee with Shri Prem Prakash, Shri P.P. Verma and Shri Vipin Mehra, was also made and it was observed that, but for the result of search, investigation and survey operation carried out by the department on the various premises of the companies of Shriram Group which included Inalsa (P.) Ltd., Meghdoot Enterprises (P.) Ltd. and Kama Commercial (P.) Ltd. the revised return would not have been filed. It. was also revealed that in these companies Shri Deepak Singh was actively involved in the management. Therefore, the assessee was aware that the department had been able to discover the modus operandi involved in the malafide donation claims. There are similar bogus claims made by other companies and executives of Charat Ram Group of companies also. If they were genuine donations, the assessee would have definitely contacted the office of the Mission or to whom the cheques of donation were handed over. In this case, the assessee and his associates deliberately prepared simple crossed cheques and then instead of sending them over to the trust through Registered Post or contacting some trustees or other responsible officers of the trust conveniently handed them over to Shri Vipin Mehra whose services were utilised to siphon back the funds. It was further observed that the assessee is connected with Shriram Group which itself has some organisations within its control and management enjoying exemption under Section 35 of the Income-tax Act. In the normal course if the donations were genuine, they should go to the organisations controlled by Shriram Group rather than to Ramakrishna Vivekananda Mission. Referring to the searches conducted on Shri Vipin Mehra and Shri Prem Prakash on 13-9-1983 and 26-11-1983, it was observed that during these searches and seizure operations at their residences, no substantial cash or bearer bonds were found nor did Shri Vipin Mehra admit any locker containing the substantial cash involved in the donation transactions of the assessee. The conduct of the assessee subsequent to the departmental enquiry also shows that the assessee was actively involved in creating circumstances to enable him to make mala fide claim in which S/Shri Vipin Mehra, Prem Prakash and P.P. Verma conspired together. In case the assessee became aware in September/October 1983 regarding defalcation of this amount, he would have lodged Police report against these persons, instead no report was lodged. The entire correspondence between these participants of the conspiracy shows that they planned to avoid payment of tax through mala fide claims and that is how they tried to fabricate evidence for the same.
3. Regarding difference in income from Varun Enterprises as declared in the original return and as declared in the revised return, the Assessing Officer attributed this to mala fide claim made in the accounts of the firm for the reasons given in para 8 of his order. Thus he concluded that the assessee a partner with 67 per cent share in the profits of the firm and was actively engaged in the day-to-day working of the firm. Therefore, the assessee is equally guilty of deliberately concealing the true share of his income from Varun Enterprises.
Therefore, the Assessing Officer held the assessee guilty of concealment in furnishing the particulars of his income. So he levied penalty in view of Explanation 1 to Section 271(1)(c) of the Income-tax Act and imposed the penalty at the maximum rate of 2 per cent of the tax sought to be evaded.
4. When the matter came before the CIT (Appeals), the CIT (Appeals) basically on the same reasons, confirmed the levy of penalty. The assessee is aggrieved against that order.
5. The learned Counsel for the assessee Shri Pradeep Dinodia submitted that the karta Shri Deepak Singh and his father-in-law's family, i.e,, Dr. Charat Ram was searched under provisions of Section 132 of the Income-tax Act on 26-11-1983. No unexplained documents, undisclosed cash or jewellery or even a standard of living not commensurate with their sources of income and wealth were found by the Appellate authorities. He brought to our attention and took us through three volumes of Paper Book filed by the assessee and two volumes of Paper Book filed by the department. He submitted that the assessee made the donations which were drawn from the bank and the assessee obtained receipts. The donation cheques were handed over to one Shri Prem Prakash, a close associate of the assessee who in turn handed over these cheques to one Shri Vipin Mehra and Shri P.P. Verma. Shri Vipin Mehra was authorised to solicit and collect donations on behalf of the donee institution which is clear from the letters of Mission dated September 1982 and December 1982. The assessee got receipts for these donations through Shri Prem Prakash. Accordingly, it filed return of income on 30-6-1983. On 4-9-1983, a public notice on behalf of another trust, namely, Hastimal Sancheti Memorial Trust appeared in The Economic Times, regarding collection of bogus donations by unauthorised persons. In pursuance to such a notice of Hastimal Sancheti Memorial Trust, the assessee started voluntary enquiries about the donations made by Inalsa Ltd. to Hastimal Sancheti Memorial Trust. On learning that donations made by inalsa Ltd. had not reached the donee trust, the assessee initiated similar enquiries about its own donations to Ramakrishna Vivekananda Mission. Such enquiries, it was submitted, were made by the assessee before the department had initiated any action or enquiry about the donation made by the assessee. It was pointed out that a survey under Section 133A was carried on Inalsa (P.) Ltd. on 14-9-1983. In that survey on Inalsa Ltd. there was a specific enquiry only to the donations to Hastimal Sancheti Memorial Trust by Inalsa Ltd. The department did not have any inkling or knowledge about the donation made by the assessee. The matter concerning donation of Inalsa Ltd. had come up for consideration before the Appellate Tribunal regarding the chargeability of interest under Section 216 of the Income-tax Act. Relying upon the order of the Appellate Tribunal in IT Appeal No. 5290/Del/1988, dated 28-8-1992, the Tribunal has decided the issue in favour of Inalsa Ltd. Further it was submitted that a survey on an assessee dose not amount to discovery of concealed income by the department. He referred to the decision of Delhi High Court in the case of A.N. Sarvaria v. CWT [1986] 158 ITR 803. He further stated that in the case of assessee the facts are much better than the case cited above. In that case the survey was on assessee but in assessee's case the survey was on a different assessee i.e., Inalsa Ltd. in which the karta of the assessee is associated as a working director. The learned Counsel invited our attention to the word "any proceedings" appearing in Section 271(1)(c) and submitted that "any proceedings" does not mean proceedings relating to other assessee or proceedings relating to same assessee but for the different year. The satisfaction of the ITO must be arrived at in the course of proceedings relating to the assessee himself. Reliance in this connection, was placed on the decision of Allahabad High Court in the case of CIT v. Gopal Krishna Singhania [1973] 89 ITR 27 (FB). It was submitted that the ITO commenced the assessment proceedings on 29-10-1985. whereas the assessee had already revised its return on 5-11-1983. Revision of return was wholly voluntary, prior to detection of concealment by the department.
Reliance was also placed on the following decisions: (2) CIT v. Bengal Iron Galvanising Works [1987] 165 ITR 249 (Cal.); and 6. The learned Counsel for the assessee very vehemently argued that the assessee made a donation to Ramakrishna Vivekananda Mission and duly disclosed the same in its original return filed on 30-6-1983. The assessee had filed copies of the receipts with its return seeking exemption. The department did not find anything at all between 30th June, 1983 and 5th November, 1983 to suggest that this donation was incorrect or non-bona fide. None of the papers filed by the department in its two volumes of Paper Book or in three volumes of assessee's paper book through which he cook us showed that the department became aware that an erroneous donation had been made by the assessee to the said institution. There is not even an iota of evidence or even a whisper about, the suspicion of the department that this donation was not bona fide. He vehemently argued that in the entire search operations conducted on S/Shri Vipin Mehra and P.P. Verma with whom incidentally the assessee has no connection or relationship except that these donations were made through these gentlemen no paper regarding this donation was found. No question was put to these gentlemen regarding this donation. They did not make any observations or statements on 13-9-1983 regarding the non-genuineness of this donation.
In fact Shri Vipin Mehra stated in response to question that he was an agent of Ramakrishna Vivekananda Mission. Therefore, what to talk of detection, there was not even a suspicion by the department that an erroneous donation had been made by the assessee to the Mission. The department had not even made enquiries from the Mission before letter dated 2-12-1983. The serious enquiry by the department with the Mission was made vide letter dated 17-9-1987. Therefore, on 5-11-1983 when revision of return took place it was purely voluntary, prior to any detection. The learned Counsel invited our attention to various letters and correspondence by wnich the assessee came to know about the fate of donations made by him to the effect that it had been misappropriated, which ended up with filing of a revised return by the assessee on 5-11-1983. (Paper Book pp. 108 to 118, filed by the assessee).
Particular attention was drawn to the affidavit of Shri Vipin Mehra (pp. 120 & 121), wherein he has clearly accepted to have misappropriated funds as an authorised agent of the Ramakrishna Vivekananda Mission. Our attention was also drawn towards recovering letter through which money was ultimately refunded by Shri Vipin Mehra by way of bank draft to the assessee on 23-11-1983. Our attention was also invited to the fact that the assessee had acted in good faith and the money in question had reached the agent of the Trust namely, Shri Vipin Mehra, which fact had not been refuted by the agent Shri Vipin Mehra or by the institution, the transaction of donation was complete.
Shri Vipin Mehra made serious charges on the assessee by way of sending a letter to the assessee on 25-10-1983 but later on in his affidavit dated 9-11-1983, he withdrew his allegations and agreed to refund the money to assessee which he ultimately refunded on 23-11-1983. In these circumstances, the bona fide intention of the assessee to make donation to Ramakrishna Vivekananda Mission, is established. Reference was also made to the decision in the case of N.R.Dongre [IT Appeal No.2420.(Delhi) of 1988, dated 18-11-1982] and it was pointed out that in that case also the donation was made through agent Shri Vipin Mehra which was misappropriated by him. The learned Counsel for the assessee drew our attention to various papers pertaining to large number of persons namely, Tech Invest of Delhi, Subhiah Chetti of Trichanpalli Renawn Corpn. Pvt. Ltd. of Bombay etc. which were recovered from the residence of Shri Vipin Mehra in search operation under Section 132 on 13-9-1983. All such papers, according to the learned Counsel, suggested the involvement of Shri Vipin Mehra in collecting donation across the country. In view of all such material available before the department, to allege a conspiracy in which the assessee was involved with Shri Vipin Mehra would be wholly unjustified. Rather it strongly goes to suggest that Shri Vipin Mehra along with certain other persons were trying to defraud innocent assessees and the Trusts throughout the country (pp 199 to 212 of the Paper Book). The learned Counsel for the assessee invited our attention to number of cases given in the chart annexed hereto as Annexure 'A' and thus pointed out that similar donations were accepted as genuine by various Benches of the Appellate Tribunal.
7. He further submitted that the case of Varun Enterprises where penalty levied was confirmed in principle was decided on peculiar facts and circumstances of the case and the submissions, explanations, informations and materials that were not adequately in any case fully made available to the Bench at the time of hearing originally in April 1992. He also brought to our notice the following factors which were considered by the Bench in confirming the penalty in that case:- (a) Survey operation by Intelligence Wing of the Income-tax Department on 14-9-1983 at the premises of INALSA. (b) The assessee was conscious of the Income-tax Department making enquiries about the nature of donations made by DCM Group. The case of the assessee was that there was no evidence to show that the assessee belonged to DCM Group. DCM Group constituted by Dr. Bharat Ram, Dr. Charat Ram and the family of late Lala Murli Dhar. The assessee did not figure in any of these groups nor had he even a single share holding nor was he a director in any of the companies known and run by DCM Limited or its holding company Madan Mohan Lal Shriram Limited.
The counsel further submitted that in any case, for detection, the survey enquiry has to be on the assessee for that specific donation and a general enquiry would not lead to detection by the department of the assessee's donation as erroneous donation.
(c) The third factor taken into account were statements of S/Shri P.P. Verma and Vipin Mehra recorded during searches. These statements were recorded behind the back of the assessee and no opportunity of cross-examination was afforded to the assessee. These statements contained nothing against the assessee. Reliance was placed on the decisions of the Supreme Court in the case of Kishinchand Chellaram v. CIT [1980] 125 ITR 713 and of Delhi High Court in the case of Sona Electric Co. v. CIT [1985] 152 ITR 507.
(d) Bench has taken into consideration the fact that two partners of the assessee-firm were directors of INALSA Limited. This fact is of no consequence at all as nothing turns on the limited enquiry on Inalsa Ltd. (e) Shri Prem Prakash was a close associate of the assessee and the DCM Group. It was submitted that Shri Prem Prakash was a close associate of the assessee when these donations were made, but as soon as the assessee was able to put his house in order and recovered most of the moneys defalcated through negligence of Shri Prem Prakash, he removed him from whatever position he held in the organisations under the control of the assessee (pp.328 to 340 of the assessee's Paper Book). It was further pointed out that the assessee had no share holding and was not a director in any DCM Group companies and only managed a small show which is known as INALSA Group and in that Shri Prem Prakash had no position whatsoever.
(f) The cheques issued by the assessee in the name of HACP Rural Development Corporation, Hyderabad, were deposited in the bank account of Parvati Charitable Foundation, affairs of which were run by Shri Prern Prakash. The counsel submitted that the facts of the case were totally different from Varun Enterprises's case as the endorsement had been made by one Murli Manohar of Ramakrishna Vivekananda Mission in favour of Manav Sewa Charitable Trust with which neither the assessee nor any member of his family nor even Shri Prem Prakash had any connection.
(g) Another factor considered was regarding remark on the cheques as "A/c Payee". It was submitted that two cheques issued in the case of Varun Enterprises the word "A/c payee" was written which was later on struckoff. But in the present case the cheques were simply crossed and the word "A/c. Payee" was not written. It was further submitted that nothing turns on whether the cheques are A/c Payee or simply crossed as in the case of Ramakrishna Vivekananda Mission, Shri Vipin Mehra had in fact opened an account in the institution's name and even if the cheques had been A/c. payee, he would have very easily defalcated the money as he has done in N.R. Dongre's case (supra). Further, under the Banking (Regulation) Act, only a bearer cheque has no safeguard. The bank which accepts the endorsement has to verify whether the endorsement is proper and genuine or not. It may be a failure on the part of the bank having accepted endorsement and easily encashed the cheque but no adverse inference can be drawn against the assessee.
(h) Regarding conduct of the assessee it was submitted that in that case it was observed that the conduct of the assessee on knowing that the donation had not reached the donee was suspicion. However, in the present case, the assessee had taken all steps to enquire about the donation. Secondly, he made all out efforts to realise the amount and in fact a sum of Rs. 4.75 lakhs was realised. Further criminal complaints were filed by the various institutions and no further gain would have occurred to the assessee in case the assessee had filed one more complaint. The judicial system does not require multiplicity of complaints. Regarding not writing to the Ramakrishna Vivekananda Mission at the first instance, it was pointed out that no purpose would have served by writing to the Mission as the assessee came to know by correspondence with S/Shri Prem Prakash and Vipin Mehra that the amount did not reach the Institution. Further complaint was not lodged because various institutions have already filed reports and the matter was pending.
So far as the contention that no donation had been made by the assessee either before or subsequent to the said donation is concerned, it was pointed out that due to change in law of Section 35CCA and Section 35(2A), 100% deduction or weighted deduction of 133% was permissible in one year which was withdrawn with retrospective effect from 1-4-1984. Therefore, this benefit was available only for one year. So donation could not have been made earlier or subsequent because the purpose was to get benefit of weighted deduction.
It was, therefore, submitted that various factors enumerated by the Tribunal for levy of penalty in the case of Varun Enterprises do not exist in the assessee's case and the case was, therefore, distinguishable on facts.
8. The learned Counsel for the assessee also submitted that the observations of the Hon'ble President in the case of Varun Enterprises [Misc. Petition No. 14 of 1993] are very material. Therefore, it was submitted that in view of the finding recorded in Varun Enterprises case (supra) itself, the facts as they have been put before the Bench and are made available to them in the case of the assessee should be viewed in their on perspective which are materially different from the material and explanations made available to the Bench in the case of Varun Enterprises (supra). It was, therefore, submitted that decision should be given by us keeping in view the various similarities and dissimilarities and on the material available to us. It was also pointed out that the case of Varun Enterprises (supra) was decided on the principle of preponderance of probability which cannot be applied to confirm or levy of penalty. Reliance was placed on the follwing decisions:- It was further pointed out that in the case of Smt. Harish Kalra, partner of the assessee in Varun Enterprises, who made donations of Rs. 71,000 to the Mission in similar circumstances, which was also defalcated and ultimately recovered from Shri Vipin Mehra, the penalty imposed on the basis of revised return was deleted by the Tribunal vide order dated 30-9-1992. (Referred in Annexsure 'A'). It was also submitted that Trust like Ramakrishna Vivekananda Mission will not involve in helping the assessee or anybody else in siphoning back funds to assessee through the medium of donation. This contention is strengthened by the order of the Appellate Tribunal in the case of N.R.Dongre (supra). With regard to controversy of authorisation of Shri Vipin Mehra, it was submitted that Shri Vipin Mehra had been authorised to collect donations on behalf of the Mission as early as in September 1982 whereas the departmental stand was that he was authorised on 19-12-1982. This fact should be viewed from the conduct that even after publication of notice, an open appeal was given to Shri Vipin Mehra in September 1982 which is confirmed by letter issued in February 1989.
Referring to two volumes of the Paper Book filed by the department, the learned Counsel submitted that the papers are being filed and relied on for the first time before the Appellate Tribunal. None of such papers was submitted or given to the assessee at any stage. In this connection, our attention was invited to the certificate on the Paper Books of the department and it was submitted that these papers cannot be admitted. It was also pointed out that the observation of the department to the effect that donation amounts of the assessee were utilised initially to purchase draft in favour of Delta Overseas Pvt.
Ltd., a company in which assessee through its karta is in control, was mere a try to link these two transactions. However, these cheques of donation made by the assessee were cleared much after the date of draft dated 4-12-1982 i.e., Rs. 3 lakhs on 6-12-1982 and Rs. 2 lakhs on 24-12-1982. In these circumstances the observations made by the department were not correct. The bank draft was cancelled before it was utilised.
9. With regard to observation of the department that the assessee did not take action when he was cheated by Shri Vipin Mehra, Shri P.P.Verma and Shri Prem Prakash, the learned Counsel for the assessee submitted that police complaint was filed by the Mission, which is clear from pp. 132-133 of the Paper Book. No. further advantage can be gained by filing one more such complaint. The assessee was interested in realising his money back and he succeeded to a greater extent.
Inviting our attention to the Explanation 1 to Section 271(1)(c) it was submitted that the assessee did offer an explanation and the same has not been found to be false. In the alternative, it was submitted that his explanation is bona fide and all the facts relating to the same and material to the computation of total income have been disclosed.
Therefore, no penalty is exigible. Reliance was placed on the following decisions:- (1) Sixth ITO v. Kumar Metal Industries [1991] 36 ITD 261 (Bom.); and It was also submitted that the assessee filed its returns on 30-6-1983 and 5-11-1983. The assessee had made complete disclosure that he is a partner in Varun Enterprises. First time when he filed his return, he correctly disclosed his share as per Varun Enterprises's return. Second time, when Varun Enterprises revised their return, the assessee on the same day revised his return enhancing his share. A partner cannot do anything more. A partner has to declare his share of profit as per firm's return and as such, the assessee has not concealed his income or furnished inaccurate particulars of income. It was pointed out that Varun Enterprises has been penalised and again a penalty on partner will amount to double penalty which is not permissible in law. Reliance was placed on the following decisions:- 10. Lastly, it was also submitted that detection denotes a positive action on the assessee or initiation of a process to uncover what is not known earlier. After search and seizure on the karta of the assessee wherein no document, cash or jewellery was found as unexplained, next action came from the department by way of initiation of regular assessment in October 1985, Further reliance was placed on the Board's Circular No. 491 (F. No. 225/86/85) IT (A-II) dated 15-11-1985). As per clarification in that circular vide its question No. 19 and answer thereto, as to where the department could be said to have detected concealment, if at all it was there, it has been clarified in that Circular that if the ITO had only prima facie belief that would not mean that concealment had been detected. It was pointed out that the ITO in his order dated 30-1-1986 mentioned that he has prima facie belief that the assessee has concealed the income. In these circumstances, there is no question of department having detected any concealment prior to 5-11-1983 when the return was revised. Ultimately, it was submitted that penalty under Section 271(1)(c) is not leviable.
11. As against this, the learned Departmental Representative Shri Sandeep Tandon very vehemently argued that penalty is exigible. The department filed two volumes of Paper Book and after the assessee's counsel completed his arguments, the department has filed another Paper Book at the start of its hearing. The learned Departmental Representative referring to pp. 1 to 28 of the Departmental Paper Book, submitted that the assessee claims to have been cheated inter alia by Shri Prem Prakash but according to the learned Departmental Representative, Shri Prakash still continues to enjoy a respectable status in DCM Group. He is signing returns of income, balance-sheets etc. of Madan Mohan Lal Shriram (P.) Ltd. which is a DCM concern.
Referring to the arguments on behalf of the assessee, he submitted that why did it take two years for assessee to take action against Shri Prem Prakash. This itself shows a soft attitude towards a person who is said to have cheated the assessee and proves that Shri Prem Prakash was acting at the instance of the assessee. Referring to the statement of Shri Prem Prakash recorded by the department, on 17-1-1986 (pp. 30-34 of the Paper Book), he submitted that Shri Prem Prakash had intentionally given an untrue statement. This is proved from the fact that in answer to question No. 2 of Prem Prakash statement dated 17-1-1986 wherein he states that before giving cheque of assessee to Vipin Mehra, he showed him resolution from the Trust authorising Vipin Mehra to collect donations on their behalf. It was pointed out that no resolution existed prior to 17-12-1982, whereas donations of the assessee were before that date. Therefore, referring to page 69 of the Paper Book, he submitted that statement dated 17-1-1986 is proved to be untrue and of no consequence. He further submitted that the donation conspiracy was hatched by the entire DCM Group including assessee with S/Shri Prem Prakash, Vipin Mehra and P.P. Verma. Reliance was placed on the statements of Shri Prem Prakash and Shri P.P. Verma, Referring to the statement of Shri S.C. Gupta, Manager (Acctt.) of India Ltd. on 14-9-1983 in which the karta of assessee HUF is working director, he submitted that the assessee had known that the matter of donation had come in the knowledge of department. Therefore, the assessee revised its return. It was submitted that conspiracy to defraud revenue originated as back as in June 1982 when the estimates for the advance-tax were filed by the assessee, in which the assessee claimed donation under Chapter VIA for Rs. 5 lakhs. Therefore, it is proved that close connections existed amongst S/Shri Prem Prakash, Vipin Mehra, P.P. Verma and the assessee. The stand of the assessee that he did not know Vipin Mehra earlier and that Prem Prakash introduced him to the assessee and that the assessee came to know about the involement of Shri Vipin Mehra only in 1983 is totally misplaced. It was submitted that there is an inter-connection between the donor and the donee. It was also pointed out that Shri Vipin Mehra had been varying his stand from case to case and even in the same case from time to time. In this circumstance, statement of Shri Vipin Mehra cannot have much evidentiary value. It was also submitted that Meghdoot Enterprises is a holding company of Inalsa (P.) Ltd. Shri Deepak Singh is a President of Inalsa (P.) Ltd. In Meghdoot Enterprises Shri Prem Prakash is a Director and Shri Deepak Singh is the Managing Director. Another company is Pushpam Investment Co. run by wife of the assessee in which Shri P.P. Verma is a director. Therefore, all these companies are inter-connected and they have been making similar type of donations in order to take benefit of Section 35CCA.12. With regard to revised return filed by the assessee on 5-11-1983, the learned departmental representative submitted that the department had seized whole lot of material during raids on S/Shri Vipin Mehra and P.P. Verma on 13-9-1983 at their residences. Conduct or evidence could only be circumstantial in such type of cases. Once the department had detected the concealment, the assessee came forward to revise its return. Therefore, revision of return after detection cannot be held to be voluntary. It was also submitted that the amount of donation made by the assessee was utilised by Shri Vipin Mehra, through the account of Manav Sewa Charitable Foundation, of which Vipin Mehra was the Chairman, to buy a draft in favour of Delta Overseas (P.) Ltd. for Rs.4 lakhs on 3-12-1982 (pp. 148 to 152 of the Paper Book). Delta Overseas had been getting loans from Pushpam Investment, which is a proprietor concern of Shri P.P. Verma. This itself proved that Shri Deepak Singh, karta of the assessee was in regular touch with and dealing with S/Shri Vipin Mehra and P.P. Verma even in 1982. This is contrary to what the assessee had stated in its averments that he did not know S/Shri P.P.Verma and Vipin Mehra in September, 1983. Referring to the statements of Shri R.B. Sharma recorded on 5-10-1983 and 7-10-1983 under Section 131 (pp. 156 to 159), he submitted that the department had detected the bogus nature of donation as on that day when Shri R.B. Sharma in his statements talked about donations by the assessee. This clearly proves that the department was in full knowledge of the donations and its bogus nature before the assessee revised its return. It was pointed out that the assessee was in personal knowledge of all the events regarding raids on S/Shri Vipin Mehra, P.P. Verma, their statements and statement of Shri H.L. Goel, Accountant, State Bank of India dated 26-9-1983, before it revised its return.
13. Regarding allegation of the assessee that opportunity to cross-examine the parties whose statements were recorded by the department, had not been provided, the learned Departmental Representative submitted that the assessee had carried out inspection of documents during assessment/penalty proceedings and all such papers were in the knowledge of the assessee. Therefore, this allegation is not true.
14. Referring to the correspondence between assessee and Shri Prem Prakash, assessee and Shri Vipin Mehra, assessee and Ramakrishna Vivekananda Mission, the learned Departmental Representative submitted that all the letters written are bogus, created, made up and self-serving. However, he stated that Registered letter dated 20-10-1983 by assesse to Shri Vipin Mehra Shri Vipin Mehra's reply to assessee dated 25-10-1983 are not bogus. Relying on the letter dated 25-10-1983 of Shri Vipin Mehra in which Shri Mehra had put the entire blame on Shri Deepak Singh, the learned Departmental Representative submitted that although the assessee threatened Shri Mehra that legal action would be taken against him but it did never do so. The correspondence taken place amongst various people who are sitting in the same office on same floor, is also quite unnatural. All such correspondence has been created to absolve the assessee. It was also pointed out that there was no further donation by the assessee to Ramakrishna Vivekananda Mission. The Departmental Representative tried to prove that the assessee had not made any donations ever to Non-DCM Group Trusts by producing Chart of donations by DCM Group from 1982-83 onwards. Referring to assessee's Paper Book p. 30, it was submitted that although Ramakrishna Vivekananda Mission sought donations from the assessee after the assessee realised the amount in question, the assessee did not come forward to make any donations.
15. It was pointed out that the facts, of the present case are fully covered by the facts in the case of Varun Enterprises (supra) in which the levy of penalty has been upheld by the Appellate Tribunal. It was also submitted that the facts of Inalsa (P.) Ltd. [IT Appeal No. 5290 (Delhi) of 1988, dated 28-8-1992] for assessment year 1984-85, facts of Usha International [IT Appeal No. 1544/(Del) of 1988] for assessment year 1984-85 and facts in the case of N.R. Dongre (supra) are similar but the case of the assessee is covered by the decision of Varun Enterprises (supra). In N.R. Dongre's case (supra) the donations were made in March 1983 when Shri Vipin Mehra was admitted as an agent whereas in assessee's case donation was made before he was authorised to collect donations. Referring to letter dated 21-2-1989 issued by Ramakrishna Vivekananda Mission, it was submitted that it is an accommodatory letter. Referring to the statement of facts filed in the case of N.R. Dongre (supra) while seeking reference under Section 256(2), the learned Departmental Representative pointed out that Ramakrishna Vivekananda Mission, Barrackpore to whom assessee donated, is a bogus trust. Therefore, it is a case of bogus donations to a bogus trust and the assessee has been rightly penalised for defrauding the revenue. Reliance was placed on the following decisions for the proposition that it is well settled that the blameworthiness of the assessee with respect to the original return cannot be avoided by filing a fresh return after concealment was detected by the ITO: (2) Kumar Jagadish Chandra Sinha v. CIT [1982] 137 ITR 722 (Cal.); and The learned Departmental Representative further submitted that mere filing of revised return under Section 139(5) does not rule out applicability of Section 271(1)(c). In this connection, reliance was placed on the decision of Allahabad High Court in the case of Mohd.
Ibrahim Azimulla v. CIT [1981] 131 ITR 680. It was pointed out that the revised return filed under Section 139(5) does not fulfil the requirement of Section 139(5) and it cannot be taken into consideration for imposing penalty under Section 271(1)(c). Reliance was placed on the following decisions: He submitted that penalty is imposable even in the case of partner where penalty has been imposed on the firm as held by the Madhya Pradesh High Court in the cases of Amritlal Somabhai v. CIT [1979] 116 ITR 833 and Ramlal Agarwal v. CIT (1982) 134 ITR 342. On the point of detection by the department, reliance was placed on the decision of Allahabad High Court in the case of Mool Chand Mahesh Chand v. CIT [1978] 115 ITR 1.
16. We have considered the rival submissions. Before we deal with the merit of the case, we would like to mention here that the department tried to produce evidence as Paper Book No. 2 on the date of hearing.
Appended below this Paper Book (pp. 1 to 184), is a certificate given by Sr. A.R. Smt. Surbhi Sinha which read as under: Certified that the above papers are from the records of the department in the Charat Ram Group of cases except charts which are based on the analysis of case records.
From this certificate it is clear that these documents and evidence do not form part of the assessee's assessment record. The learned Counsel for the assessee had rightly taken objection that these papers on the basis of which the learned Departmental Representative has developed the arguments, were never confronted to the assessee. Neither the Assessing Officer, nor the authorities below have ever relied upon the documents now being placed before the Appellate Tribunal for the first time. We see merit in the objection of the learned Counsel for the assessee. It is a settled principle of law that evidence or document which does not form part of the assessee's record and pertains to other person, cannot be used against the assessee unless the authorities below have relied upon those evidences and the assessee has been given proper opportunity to controvert or confront the contents mentioned therein. The entire evidence the learned Departmental Representative had relied before the Appellate Tribunal from pages 1 to 184 filed in the Paper Book No. 2 was either not filed by the assessee or collected by the department from other cases, none of which was ever used by the department in this case nor put to the assessee at any point of time.
In our view these documents cannot be relied upon at all. Reliance placed upon these documents and arguments based upon them as well as inferences drawn out of them were all to be ignored.
17. In this case the department has conducted enquiries in the concerns in which Shri Deepak Singh is one of the Executives and on the basis of enquiries made by the department, conclusion was drawn that after the discovery of bogus nature of donantions, the assessee had revised return on 5-11-1983 withdrawing his claim for deduction. The case of the assessee is that the department had viewed the entire transaction with suspicion because of a generalised belief that existed at the relevant time that people were making false claims under Section 35CCA for getting tax exemption. Instead of judging the issue on merit of this case, the department disassociated it in toto with the general prejudice. By saying so the department has assumed that the assessee, agent Shri Vipin Mehra and the Mission have colluded to defraud the revenue.
18. The first issue before us is whether the assessee bona fide intended to make the donation to an approved institution. Looking into the entire facts, the voluminous papers and the averments of both the parties, we have no doubt in our mind that the assessee had a bona fide intention to make a genuine donation to an approved trust under provisions of Income-tax Act. This intention was clearly stated and disclosed to the Department in the estimate of advance tax filed by the assessee and in the original return of income filed on 30-6-1983. Till that time, there was no evidence on record to show that the assessee did not intend to make a bona fide donation to a genuine and approved trust.
19. The second issue is whether the assessee was conspiring with Shri Vipin Mehra and Shri P.P. Verma in deliberately making false/bogus donations. There is ample evidence on record to show that Shri Vipin Mehra and Shri P.P. Verma actually diverted the donations made by the assessee illegally. However, there is no evidence on record to suggest that the assessee was in any way involved or a party to the illegal misappropriation of donations made by the assessee to the donee trusts.
It seems probable that these two persons namely, S/Shri Vipin Mehra and P.P. Verma devised a scheme of first gaining the confidence of approved institutions and trusts all over India and then approaching donors for making a donation to those institutions through them and then opening fraudulent bank account aided and abetted by bank officials fraudulently defalcated the bona fide donations made by the donors to these bogus accounts. On being caught and confronted in their scheme, they refunded bulk of the money to the various donors or in some instances sent the money after a considerable gap to the donee institutions. In this way, they cheated the donors, misused the noble names of the approved institutions for their personal gain. As far as the role of Shri Prem Prakash is concerned, in the papers produced before us, there is no direct, evidence of his having introduced any of these persons to the bank or helped these gentlemen to withdraw the money from the bank. Totally unsubstantiated, uncorroborated statement of a bank official recorded on 26-9-1983 who himself completely ignored all the rules, norms and procedures of the bank cannot be relied upon.
We are, therefore, of the opinion that the assessee was in no way connected and was not a party to the illegal diversion of bona fide donations made by the assessee to approved trusts.
20. In our view certain amount of suspicion appears to have dominated the departmental authorities while appraising evidence produced by the assessee in support of his claim. In order to conclude that the assessee had made false claim of donation for gretting unjust deduction under Section 35CCAwe have to assume, in other words, we are asked to assume that the assessee, the agent Shri Vipin Mehra and the Mission have colluded to defraud the revenue. This is an unthinkable proposition. One can believe that a person with a view to enrich himself may indulge in such kind of unholy and unethical practices but the Mission established for the benefit of public at large cannot indulge in such practices. This fact is clear from the correspondence taken place amongst Shri Deepak Singh, Mission and the department.
21. As regards the motives attributable to the assessee on the action or inaction taken by the assessee with regard to Shri Prem Prakash, Shri Vipin Mehra and Shri P.P. Verma is concerned, we agree with the assessee that under the Indian Penal Code, one complaint is enough.
Under the scheme of criminal jurisprudence, once a criminal complaint has been filed by anybody, the law and order machinery is set in motion and such enforcement agencies are duty bound to find the truth of the matter which may involve the complainant himself. Almost all the penal provisions which are important and have a bearing on the case of this type have been invoked by the various institutions in the criminal police complaint filed by them. No further benefit would have accrued to the donors by filing of one more additional complaint. As far as Shri Prem Prakash is concerned, the assessee took immediate steps as soon as he was able to recover most of money and removed him from whatever posts he held under the assessee's control. We agree with the agruments of the learned Counsel for the assessee that the assessee could not issue a geneal 'firman' debarring anybody from employing him in any capacity in any company on which the assessee had no control.
22. Now the question arises whether Shri Vipin Mehra was authorised to collect the donations on behalf of the Mission at the time when assessee made donations to or he was not authorised to collect donations on behalf of Ramakrishna Vivekananda Mission or knowing this, in order to take false exemption under Section 35CCA and to get back the money, the assessee had shown a donation of Rs. 5 lakhs and claimed exemption as such. In this connection, we would like to mention that all through the case of the assessee it is noted that Shri Vipin Mehra is an authorised agent of Ramakrishna Vivekananda Mission and he has represented as such. To support this contention, the assessee had filed copy of letter dated 27-9-1982 in which the governing body of the Mission has requested to extend the cooperation to help the Mission in fulfilling the village development project in Village Joyrambati, District Bankura of West Bengal. The learned Departmental Representative pointed out that letter dated 27-9-1982, is not a letter authorising Shri Vipin Mehra to collect donations. However, if we read this letter along with letter dated 21-2-1989, obtained from Ramakrishna Vivekananda Mission, it will be clear from that letter that Shri Vipin Mehra was authorised to collect the donations on behalf of the Mission as back as in September 1982 and he was handed over an appeal letter No. F. 141/B/DEL dated 27-9-1982. The subsequent letter date 21-2-1989 makes it clear that the general appeal was made by the Mission authorising Shri Vipin Mehra to collect donations. Therefore, in the event of sequence of this case, it is clear that Shri Vipin Mehra was authorised on behalf of Ramakrishna Vivekananda Mission as back as September 1982. The objection of the department was that letter dated 21-2-1989 is an accommodation letter from the Mission. We cannot believe that a Mission of this stature would issue such a letter at the request of the assessee to shield the misdeed of a person. In case they had not authorised a particular individual to collect donations specially in the circumstances when Mission had already given public notice on 4-9-1982 in all important Newspapers so as to bring awareness to the public at large that certain individuals posing as authorised agents are collecting donations and in spite of that, appeal was handed over to Shri Vipin Mehra, shows that he was authorised to collect donations fully knowing about the general notification to public. This fact is corroborated by subsequent letter dated 21-2-1989. It is pertinent to mention here that public notice appeared in the Newspaper on 4-9-1982 whereas this general appeal was handed over to Shri Mehra on 27-9-1982. There is another corroborative piece of evidence which is discussed in the case of N.R. Dongre v. ITO [1992] 40 ITD 574 (Delhi), copy of which is filed on record, where the Tribunal had record finding that Shri Vipin Mehra was authorised by the Mission to collect donations. (This is an order which had been relied upon by the assessee and the department had tried to distinguish the facts of this case from the facts of the assessee's case). Thus, it cannot be said that the assessee ever knew that Shri Vipin Mehra was not an authorised agent of the Mission. The bona fide of the assessee is also established by this fact that as soon as the public notice appeared in the Newspaper on September 1982 and issue came to his knowledge he wrote a letter to Shri Prem Prakash to enquire about the fate of donations made through him. The assessee took steps to approach the persons to whom the crossed cheques were issued. The first letter was written by the assessee on 8-10-1983 to Shri Prem Prakash through whom the donations were made to Ramakrishna Vivekananda Mission. The subsequent series of correspondence and sequence of events and efforts made by him in approaching the persons to whom the cheques or drafts were handed over yielded positive results in realising a handsome amount of Rs. 4.75 lakhs indicate that the assessee faithfully relied on the representation of Shri Vipin Mehra and Shri Prem Prakash in handing over crossed cheques of donation for onward transmission to the Mission and when the assessee was got alerted and made enquiries to find out whether the donations reached to the donee or not, he took every step to know the true state of affairs and after knowing that this amount had been misappropriated by Shri Vipin Mehra, he took steps to realise handsome amount of Rs. 4.75 lakhs from him. Thus, in these circumstances it cannot be said that the donor had the intention of defrauding the revenue.
23. The next issue to be decided is whether there was any link between Shri P.P. Verma and Shri Vipin Mehra with the assessee before the donation was made. Reliance in the case of Vipin Mehra (supra) is placed on some unsigned type written sheets of paper found from the residence of Shri Mehra on 26-11-1983 which were never confronted or put to the assessee ever before. These purport to be receipts for sale of miscellaneous items like pigeons, sparrows, ash trays etc.
Incidentally, these papers were never found when there was a search on 13-9-1983 though the date put on these papers is April 1982. We do not know in what circumstances, these papers were found from Shri Mehra's residence and the counsel appearing for the assessee has unequivocally stated that the assessee has never purchased any of these articles from Shri Vipin Mehra and do not know him at all and had no such relationship with Shri Mehra. We accept the assessee's explanation and hold that there is no evidence on record which can be relied upon to show that, there was any kind of intimacy between the assessee and Shri Vipin Mehra before these donations or during the time these donations were made. As far as Shri P.P. Verma is concerned, the papers relied upon in department's second paper book are in respect of loans given by M/s Pushpam Investment Company to M/s Varun Enterprises and M/s Delta Overseas Pvt. Ltd. Pushpam Investment Company is purported to be the sole proprietorship of Smt. Pushpa Verma and the loans have been given in the normal course of commercial transactions to M/s Varun Enterprises and M/s Delta Overseas Pvt. Ltd. There are covering letters enclosing interest cheques and deduction of tax at source. The moneys have been accounted for in M/s Varun Enterprises and M/s Delta Overseas Pvt. Ltd. as cash credits and the expenses on interest have been allowed. The cheques obviously have to be signed by an authorised official of these concerns which in this case happens to be Shri Deepak Singh. The assessee's counsel's argument that income-tax refunds have to be signed by the Income-tax Officer, but such signatures would not lead to an inference of intimacy between the Tax Officer and the assessee is well taken. In our opinion, therefore, these are normal routine commercial transactions and do not show any intimacy between the assessee and Shri P.P.Verma.
24. Further, we find that the enquiries made by the donor were earlier than the enquiries started by the department in the case of assessee and other group of companies by way of survey, searches and recording of statements. Therefore, the assessee must be conscious of the enquiries being made by the department in the case of donations. As soon as he came to know that there was some misappropriation in respect of donations, he concentrated his efforts on realising the amount and at the same time he withdrew his claim on 5-11-1983 by filing a revised return before the department could start action against the assessee.
All these circumstances establish bona fide claim made by the assessee in the original return.
25. The intention of the assessee was to take advantage of tax benefit introduced through Section 35CCA which was in force only for one year and thereafter this provision was deleted from the Income-tax Act.
Thus, the assessee has not committed any sin if he tiled to take benefit of legal provision and at the same time wanted to have more benefit to the HUF by giving donations to Ramakrishna Vivekananda Mission under Section 35CCA. The purpose of Section 35CCA is to grant weighted deduction of about 133 per cent and it was this intention of taking advantage of weightage deduction that the assessee had made donations and when he learnt that he was cheated by the intermediatory, he took over every efforts to recover the money and succeeded in recovering the same. Had the assessee donated this amount in the charitable trusts of Shriram Group, he would have got 50 per cent of exemption because these trusts as per assessee's counsel were authorised to get donation under Section 80GGA whereas by donating to Ramakrishna Vivekananda Mission he would have got weighted deduction of 133 per cent. In this way the assessee would have got double benefit, a name for donation and higher deduction for his income. It will be pertinent to mention here that the present revised return was filed by the assessee on 5-11-1983 before a search had taken place in the premises of the assessee on 26-11-1983 and 6-12-1983. If we go through the copy of Panchnama drafted at the time of search on the assessee, we will find that no incriminating documents were found. Money which was shown to have been donated was not available with the assessee. It is later that the assessee had realised this amount from Shri Vipin Mehra.
All these circumstances go to prove the bona fide of the assessee for making a rightful claim and exemption under Section 35CCA when they have made a donation to the Mission. There is another circumstance which goes in favour of the assessee that at the time of issuing cheques, those cheques were crossed and subsequently it is found that these cheques were endorsed by one Shri Murli Manohar as Manager of Ramakrishna Vivekananda Mission and the endorsement was confirmed by Shri Vipin Mehra. Therefore, the assessee took every step to safeguard his interest. However, with the connivance of Shri Murli Manohar, Shri Vipin Mehra was able to encash the amount and deposited it in the Manav Sewa Charitable Trust. In any way, involvement of Shri Deepak Singh is not proved in these circumstances.
26. The department's Paper Book contains statement of Shri S.C. Gupta on page 29. On a perusal of the statement, it is clear that the enquiry under Section 1G3A of the Income-tax Act was very limited to the donation of Rs. 30 lakhs made by Inalsa to Hastimal Sancheti Memorial Trust and nothing more. We have now the benefit of the order of the Appellate Tribunal in the ease of Inalsa (P) Ltd. (supra) in which the Delhi Bench has held that the donation of Rs. 30 lakhs was bona fide.
Therefore, nothing adverse turns on this factum of the survey as far as the assessee is concerned.
27. The department has relied on the documents and evidence found at.
the time of search in the assessee's group of companies and firms but this material was neither confronted with the assessee nor made available to him. Statements were also recorded at the back and opportunity of cross-examination was not given to the assessee.
Therefore, these statements and evidence cannot be used against the assessee in view of the established principle of natural justice.
Therefore, from the sequence of events it is clear that the assessee revised return voluntarily before the department had detected any concealment or before the department had readied to the verge of discovery in the assessee's case. So far as the argument of the learned departmental representative that no formal introduction was given in the bank where S/Shri Vipin Mehra and Prem Prakash have operated bank account, is concerned, in our view this instance will not go against the assessee because it is the business of the bank authorities to care for the procedure as to how they should allow public to open the account and in case they had connived to divert the money from the bank, they should be held responsible for that. Unless it is established that the assessee is in any way instrumental in the opening of the bank account, he should not be held responsible for that.
28. In this case it was further noted that the genuineness of the donations was challenged in one way or the other in assessee's group of cases. In all the cases except in the case of Varun Enterprises (supra) different Benches of the Appellate Tribunal differently constituted, consistently and independently held that the donations made were genuine. In all the cases including M/s Varun Enterprises the actors are the same and also the modus operandi. In the case of N.R. Dongre (supra) which stands on different footing, the donation ultimately reached the donee. Therefore, that case cannot be compared with any other case. Action was taken by the respective donors including M/s Varun Enterprises. As soon as they got alerted by a public notice published by Hastimal Sancheti Memorial Trust in the Newspaper informing the public that some persons were collecting the donations on their behalf without any authority they started making enquiries to find out whether their donations had reached the recipient trusts or not. In that case also the actors are the same as are involved in the present case. In the present case also the assessee got alerted, he made enquiries to find out whether the donations made by him reached the donee or not. Therefore, the case of the assessee is in no way different from the cases decided by the Appellate Tribunal through various Benches constituted by different Members of the Tribunal.
Except in the case of Varun Enterprises [IT Appeal Nos. 3510 and 3607 (Delhi) of 1987] the conclusion was that the donations made are genuine.
29. The department has heavily relied on the decision in the case of Varun Enterprises (supra) and observations therein. Besides what the learned Counsel for the assessee has pointed out with which we agree the main distinguishing feature we find in the case of Varun Enterprises (supra) is that the Bench there held that the penalty was leviable on the basis of preponderance of probabilities holding at the same time that there was no conclusive proof. Again for the lack of conclusive proof, the penalty was reduced to minimum. We would like to mention here that it is a moot point whether a penalty for concealment of income could be levied on the basis of probabilities. This is a distinguishing feature of Varun Enterprises. Another distinguishing feature of Varun Enterprises with other cases was that the decision of the Appellate Tribunal in the case of Inalsa (P.) Ltd. (supra) where the Tribunal accepted the genuineness of a like donation was not placed. When the attention of the Appellate Tribunal was drawn to the decision in the case of Inalsa (P.) Ltd. (supra) by way of Misc.
Application, the Bench refused to recognise it holding that it would amount to review. We do not know what would have been the decision of the Bench had one earlier order was made available. Therefore, the facts in the case of Varun Enterprises (supra) are distinguishable from the facts of the present case. We feel that on the facts and circumstances of the case of the assessee it stands on its own facts there was the bona fide belief that the donations made by the assessee were genuine and before the department could detect any concealment or was on the verge of detection, the assessee has revised the return voluntarily. Therefore, the claim under Section 35CCA was bona fide in all respects. Therefore, we do not think it proper to discuss the case laws cited by either party. So, penalty cannot be exigible in respect of claim for exemption under Section 35CCA and later on withdrawn by filing a revised return.
30. The second question which we have to consider is with regard to penalty levied on account of share of the assessee in Varun Enterprises. The levy of penalty on this count, in our opinion, is wholly misconceived. A partner can only declare his share of profit as per firm's return. In the assessee's case, whatever the firm returned at the first instance, the assessee declared his share thereof on 30-6-1983. The firm revised its return on 5-11-1983 and so does the assessee on the same day and increases his share as per firm's return.
The assessee cannot do any more. Therefore, on the first principle itself, there was a complete, full and true disclosure of income as far as the share of profit of the assessee was concerned in Varun Enterprises, both on 30-6-1983 as well as on 5-11-1983 and the penalty levied thereon has to be cancelled. The alternate submission of the assessee that this would amount to double penalty on the same amount has also to be accepted. A penalty which is levied on the firm cannot again be levied on the share of the partner in the firm as it would amount to double penalty on the same amount. This view has been taken by various High Courts in the following decisions: The Department has given two authorities of Madhya Pradesh High Court in the cases of Amritlal Somabhai (supra) and Ram Lal Agarwal (supra).
The Madhya Predesh High Court has dissented from the view taken by the Allahabad, Punjab & Haryana, and Delhi High Courts. As already noted above, SLP against Punjab & Haryana High Court has been dismissed by Supreme Court and being in the jurisdiction of Delhi, we are bound by the judgment of the Delhi High Court. We, therefore, respectfully following the decisions of the Allahabad, Punjab & Haryana High Courts and Delhi High Court hold that double penalty, once on the firm and again on the partner on his share from the firm, cannot be levied.
31. Our conclusion in brief is that the evidence, averments and agruments made during the course of these appeals and records perused by us and we have not been able to find any evidence to infer that the department has detected that this donation was not bona fide or had been diverted at the instance of the assessee illegally from the donee trust for the personal benefit of the assessee. The department did not have any suspicion as to the diversification of this donation before this return was revised. The assessee himself had been disclosing right from June 1982 that it intended to make a donation eligible for deduction under Section 35CCA/80GGA in his first estimate filed in June 1982 and its return in Junel993. This was the knowledge given by the assessee to the department. In its return also it not only stated that it had made this donation, but also enclosed receipts which were given to the assessee by Shri Vipin Mehra and also notification of the eligibility of the donee institution. Thereafter, due to events which happened in other assessee's cases, the assessee became anxious as to whether the donation had actually reached the trust or not. Enquiries were voluntarily carried out from these two persons namely S/Shri Prem Prakash and Vipin Mehra and as a result of these enquiries, the assessee voluntarily revised its return on 5-11-1983. In this connection, we would like to refer Clarification No. 6, in Circular No.451 dated 17-12-1986 in response to question No. 19 where the clarification is as under: If the Income-tax Officer has already found material to show that there has been concealment, that would mean the Department has detected the concealment. If the ITO had only prima facie belief, that would not mean that concealment has been detected.
In the case before us, apart from the knowledge that donation had been made by the assessee, which was given to the department by the assessee himself in its estimates of advance tax and return of income, the department had no other suspicion, information or material to show that this donation had been diverted. Therefore, there is no question of being any detection. In view of this, the revision of return being voluntary, the question of concealment or furnishing of inaccurate particulars of income does not arise.
32. Before we part with, we would like to mention here that in Varun Enterprises' case (supra), various factors taken into account for deciding that appeal, had been very clearly and ably distinguished and the questions raised had been answered by the learned Counsel for the assessee. These questions were left unanswered at the time of Varun Enterprises' case was argued. Therefore, the facts and circumstances of the case, material produced during the course of arguments of the case and the explanations provided being different, an independent view has been taken in the case before us. The question of reference to a larger Bench also, therefore, does not arise as we do not find any conflict in views and we are mainly following previous decisions of the Appellate Tribunal, having found on the basis of the particulars, facts of this case and the explanations and material made available to us that this is distinguishable from the case of Varun Enterprises (supra).
33. Penally under Section 273(2)(a) has been imposed by the Assessing Officer for assessee having furnished estimate of advance tax which he knew or had reason to believe to be untrue. The learned Counsel for the assessee contended that, the result of this penalty is consequential to the appeal against levy of penalty under Section 271(1)(c). This position is not disputed by the department.
34. Since we have deleted penalty under Section 271(1)(c), we are of the opinion that penalty under Section 273(2)(a) cannot be charged.
Statement of cases decided by the Appellate Tribunal on the point of donation1. Inalsa Ltd. Morarji Bai 271(1)(c) CIT(A) has deleted A.Y. 1983-84 Desai Gramonati the penalty by holding Trust.
that ITO has no reason to record any satisfaction for2. Inalsa Ltd. Hastimal 216 ITAT has deleted the 5290/Del/88 Sancheti interest by holding that for A.Y. Memorial donation was genuine.
1984-85 Trust.
Order dated 28-2-1992.
'C' Bench3. Kama Commercial 271(1)(c) Penalties cancelled by Pvt. Ltd, Morarji Bai 273(2)(b) ITAT.A.Y. 1983-84 Order dated 10-12-1992.
'A' Bench.4. K.S. Kalra Ramakrishna 271(1)(c) Penalties cancelled by & Sons (HUF) Mission Regional I.T.A.T.ITA No. 5864/ Institute of Del/88 Graphic Arts.
Order dated 30-9-1992 A.Y. 1983-845. K.S. Kalra Ramakrishna 271(1)(c) Penalties cancelled (Ind.) Mission by I.T.A.T.ITA No. 5866/ Del/88 Order dated 30-9-1992 A.Y. 1983-846. Varun Hastimal 216 Interest delected following Enterprises Sancheti Usha & Inalsa Orders.
ITA No. 925/ Memorial Del/89 Trust.
Order dated 30-11-1992 A.Y. 1984-857. N.R. Dongre Ramakrishna 143(3) Deduction allowed ITA No. 2420/ Mission.
Del/88 Order dated 13-1-1992 A.Y. 1983-848. Usha Aparna 216 Interest deleted by International Ashram holding that donation was Ltd. ITA No. genuine.
1544/ Del/88.