Smt. Ram Piari Vs. Commissioner of Income Tax - Court Judgment

Excerpt:
head note: income tax act, 1961 . penalty under section 271(1)(c) - validity non-disclosure of capital gains--assessee had not disclosed capital gains on sale of property and only disclosed the agreement to sell in the application for clearance certificate in form no. 34a. such disclosure could not be treated as disclosure made in return and as such the assessee was guilty of concealment as well as for furnishing inaccurate particulars of income. penalty imposed by ao as well as tribunal was, therefore, justified. the only contention raised on behalf of the assessee is that the assessee had made an application for clearance certificate in form 34a for sale of the property and, thus, the matter was brought to the notice of the ao. this plea was rightly rejected as mere disclosure of agreement to sell in application for clearance certificate in form 34a cannot be equated to disclosure in the it return. the assessee failed to file a revised return in spite of notice under section 148. the assessee was also convicted for concealment. [para 5] there was material for the ao to initiate penalty proceedings. contention that the penalty was liable to be set aside on account of cit(a) describing the action of the assessee as 'showing inaccurate particulars', while the ao described the same as 'concealing the particulars' cannot be upheld. the observations of the cit(a) are also in the context of concealing and mere fact that mention of inaccurate particulars was also made, did not make any difference. on admitted facts, it was clear that the assessee had concealed the particulars of income as well as given inaccurate particulars. it was observed that finding of tribunal could not be interfered with unless perverse. in the present case, the assessee has been convicted even in criminal proceedings. findings of the tribunal cannot be held to be perverse by any standard. [para 6] income tax act, 1961 section 271(1)(c) - hindu law -- custom: [vijender jain, c.j., m.m. kumar, jasbir singh, rajive bhalla & rajesh bindal, jj] alienation of ancestral property - punjab and haryana - held, in respect of state of punjab by virtue of punjab amendment act, 1973 there is a complete bar to contest any alienation of ancestral or non-ancestral immovable property or appointment of an heir to such property on ground that such alienation or appointment was contrary to custom. in punjab the property in hands of a successor has to be treated as coparcenary property and its alienation has to be governed by hindu law except to the extent it is regulated by sections 6 and 30 of the hindu succession act. in haryana, property in hands of successor has to be treated as coparcenary property as well as ancestral property. parties can fall back upon hindu law in case they fail to establish that rule of decision is custom. therefore, in haryana both under hindu law and the customary law, the alienation would be open to challenge. custom was given precedent over uncodified hindu law presumably for reason that custom has been consistently replacing the hindu law. however, it was soon realized that ancestral immovable property, which ordinarily held to be inalienable amongst jats of punjab by virtue of custom except for necessity, no limitation was placed on degrees of collateral, eligible to contest such alienation. it was, therefore, felt necessary to engraft certain restriction on degrees of collateral, eligible to contest an alienation, which under the custom itself was not limited. accordingly, the punjab custom (power to contest) act, 1920 (act no.2 of 1920) was enacted. the hindu succession act was extended to the state of punjab. act 2 of punjab act defined expression alienation to include any testamentary disposition of property and appointment of an heir was to include any adoption made or purporting to be made according to custom. a further provision was made by section 3 that hindu succession act was to apply only in respect of alienation of immovable property or appointment of heirs made by persons who in regard to such alienation or appointment were governed by custom. whereas section 4 declared that hindu succession act was not to affect any right to contest any alienation or appointment of an heir made before the date on which the succession act was to come into force. in other words, act, no.2 of 1920 was not to affect alienation or appointments of heir made before date on which it came into force. it also preserved the rights of any alienation or appointment of an heir made by a family. after section 7 was inserted in act of 1920 by the punjab amendment act of 1973 right of contest being contrary to custom had been totally effaced and taken away. therefore, no person has any right to contest any alienation of immovable property whether ancestral or non-ancestral on ground of being contrary to custom after january 23, 1973. in haryana, the situation as enunciated by act no.2 of 1920 continued to prevail in respect of alienation because no reforms parallel to punjab as brought by amendment act of 1973, had been enacted although right to pre-emption has been substantially abolished in haryana also. no steps even have been taken in that regard. therefore, situation in haryana have to be regarded as it existed under act no. 2 of 1920. hindu succession act,1956[c.a.no.30/1956] -- sections 6 & 30: [vijender jain, c.j., m.m.kumar, jasbir singh, rajive bhalla & rajesh bindal, jj] alienation of coparcenary property - law laid down by full bench in joginder singh kundha singh v kehar singh dasaundha singh [air 1965 punjab 407] and pritam singh v assistant controller of estate duty, patiala [1976 punj lr 342] -whether there is any conflict? - held, the basic controversy in the full bench decision of joginder singhs case was regarding constitutional validity of section 14 of hindu succession act and as to whether it infringes article 14 of constitution. it was held that the estate held by male and limitation on his power of alienation were in no way removed and the reversioners were not debarred from challenging such alienations. the full bench held that section 14 of hindu succession act postulates that estate held by a hindu female before enforcement of succession act either by inheritance or otherwise, was enlarged and on date of enforcement of succession act, she became a full owner. likewise, if she has inherited any estate after the commencement of the act, she was to be regarded as absolute owner rather than a limited owner. consequently, the limitations on power of alienation automatically vanished. this was the necessary result of the provisions made in section 14 of the act. the full bench further held that in respect of male proprietors, no corresponding provision was made either enlarging their estate in ancestral property or enlarging their power of alienation over property inherited by them. however, it noticed section 30 and observed that it only deals with power of his share in coparcenary property by will, which prior to enforcement of the act, he had no right to do. the only provision made in respect of male proprietor regarding alienation of property was his power of alienation by will. in so far as persons governed by custom are concerned, they continued to be governed by the restriction on the power of alienation of a male holder as existed before enforcement of the act. likewise, other restriction on alienation other than disposal by will also continued. the full bench, thus, recognized the superior right of hindu females by virtue of section 14 and upheld the provision as intra vires. the argument that reversioners have ceased to exist after enactment of provisions of section 14 of succession act, was rejected as there was no provision pointed out to that effect. the proposition laid down by the full bench in pritam singhs case was that the hindu succession act has not abolished joint hindu family with respect to rights of those who were members of mitakshara coparcenary, except in the manner and to the extent mentioned in sections 6 and 30 of the act, this statement should also imply, though it does not say so expressly, the succession act to this extent does not affect the rights of the members governed by dayabhaga coparcenary. the full bench in pritam singh;s case expressly noticed the judgment of earlier full bench in joginder singhs case but construed the same as irrelevant by observing that it dealt with the power of alienation of a person governed by customary law and constitutional validity of section 14 of hindu succession act. thus there is no real conflict between the two full bench judgments. both the full bench judgments have been delivered on the assumption that joginder singhs case dealt with question of alienation whereas pritam singhs case had decided the question concerning succession. even on fact in joginder singhs case the issue was validity of alienation by consent decree by a father to his two sons, which was challenged by third son, whereas in pritam singhs case the question of nature of property in hands of sons on death of their father had arisen for purposes of assessment of estate duty. in pritam singhs case the property in the hands of the sons was held to be coparcenary property and only 1/3rd of property belonging to deceased father was considered eligible for estate duty. therefore, there was no question of alienation in pritam singhs case. - thereafter penalty was imposed, which was upheld by cit(a) as well as by the tribunal. subsequently, it was found that the assessee had sold 1,000 shares of a company and had capital gains but she had failed to furnish necessary particulars in the original return. the assessee failed to file a revised return in spite of notice under section 148 of the act. on admitted facts, it was clear that the assessee had concealed the particulars of income as well as given inaccurate particulars.adarsh kumar goel, j.1. the tribunal, chandigarh bench, chandigarh has referred, at the instance of the assessee, following questions of law for opinion of this court under section 256(1) of the it act, 1961 (for short, 'the act') arising out of its order dt. 15th march, 1993 in ita no. 1247/chd/1987 for the asst. yr. 1977-78:1. whether on the facts and in the circumstances of the case, the tribunal is right in holding that penalty proceedings under section 271(1)(c) of the it act, 1961 had been validly initiated by the ao ?2. whether on the facts and in the circumstances of the case, the tribunal was justified in upholding the penalty especially when ao levied the penalty on account of wilfully and deliberately concealing the particulars of income whereas it has been sustained by the cit(a) on a different ground of showing inaccurate particulars of income in the return ?3. whether on the facts and in the circumstances of the case, the finding recorded by the tribunal regarding concealment of particulars of income is based on evidence on record ?2. the assessee derives income from property. the assessment was completed for the assessment year but the same was reopened under section 147(a) of the act. notice under section 148 of the act was served on the assessee but no revised return was filed in spite of the said notice. the ao found undisclosed income from capital gains on. account of sale of property and penalty proceedings were also initiated. thereafter penalty was imposed, which was upheld by cit(a) as well as by the tribunal.3. contention of the assessee that while the ao levied penalty on the ground of concealment of particulars, cit(a) sustained the same for showing inaccurate particulars. the tribunal did not find any difference in the approach nor any discrepancy on that account. the tribunal held as under:13. the learned departmental representative has argued that the sale had taken place on 29th april, 1976, whereas the return had been filed on 30th july, 1977, but the income resulting from capital gain was not shown by her. not only that, the assessee did not think it appropriate to file a revised return after notice under section 148. it has been therefore, argued that the assessee had wilfully and deliberately concealed her income not only in the original return filed on 30th july, 1977 but even subsequently. as regards income from property shown by the assessee for the relevant year, it has been pointed out by the learned departmental representative that income from property was shown as if to represent it to be income from property which was actually sold by her. it was represented to be income from that property and thereby it was attempted to represent that property had not been sold. therefore, it has been argued by the learned departmental representative that it was a case of concealment. it has also been urged by the learned departmental representative that the assessee had at her disposal legal advice and the return had been filed under legal advice and the column prescribed in the return for showing capital gain was deliberately left blank. not only that, the advocate representing the assessee attended the assessment proceedings also and it cannot be inferred that the assessee had any wrong advice or had some misconception about taxability of capital gain. it has also been argued on behalf of the revenue that even if the assessee had given any information regarding her agreement to sell, it will not absolve her of the responsibility and liability for disclosing income from capital gain. the learned departmental representative has invited our attention to a decision of the supreme court in the case of cit v. smt. p.k. kochammu amma peroke : (1980) 19 ctr (sc) 196 : (1980) 125 itr 624 (sc), wherein it was found that the assessee had not shown in the return certain amount representing share of her husband and minor daughter in a firm. these amounts were includible in her total income. it was held by the hon'ble supreme court that she had concealed particulars of her income and was guilty of concealment of the amount, which attracted applicability of section 271(1)(c) of the act. reliance has also been placed on a decision of the calcutta high court in the case of mrs. leela nath v. cit : (1986) 55 ctr (cal) 89 : (1987) 164 itr 216 (cal). in that case also, the ao had completed the assessment on the basis of return filed by the assessee. subsequently, it was found that the assessee had sold 1,000 shares of a company and had capital gains but she had failed to furnish necessary particulars in the original return. the ao reopened the assessment under section 147(a) and completed the assessment, treating the receipt as capital gains. it was pleaded by the assessee in that case that the ao could have noticed from the wt returns filed by the assessee for two years that the assessee had sold certain shares. it was held by the hon'ble calcutta high court that it was the duty of the assessee to disclose all primary facts. the learned departmental representative has, on the basis of aforesaid decision, contended before us that by mere filing an application for obtaining clearance certificate, the assessee cannot be said to have disclosed particulars and any benefits on her appeal cannot be assumed on that basis.14. looking to the entire facts and circumstances of the case, we find that bona fides on the part of the assessee are not reflected at all. this is a clear case of concealment of particulars of income.15. it has also been brought to our notice by the learned departmental representative that the assessee has been convicted by the learned chief judicial magistrate, chandigarh on 21st feb., 1984 for six months imprisonment under section 276c(1) and for another six months imprisonment under section 277 of the act. this order of conviction is said to have been upheld by the appellate court.16. looking to the entire facts and circumstances of the case, we are of the considered opinion that the order of penalty does not suffer from any defect. since the concealment of particulars of income is very evident on the part of the assessee and it is found to be a deliberate act, the orders passed by the learned lower authorities are upheld.4. we have heard learned counsel for the parties and perused the record.5. the only contention raised on behalf of the assessee is that the assessee had made an application for clearance certificate in form 34a for sale of the property and, thus, the matter was brought to the notice of the ao. this plea was rightly rejected as mere disclosure of agreement to sell in application for clearance certificate in form 34a cannot be equated to disclosure in the it return. the assessee failed to file a revised return in spite of notice under section 148 of the act. the assessee was also convicted for concealment.6. in view of above undisputed facts, we find that there was material for the ao to initiate penalty proceedings. contention that the penalty was liable to be set aside on account of cit(a) describing the action of the assessee as 'showing inaccurate particulars', while the ao described the same as 'concealing the particulars' cannot be upheld. the observations of the cit(a) are also in the context of concealing and mere fact that mention of inaccurate particulars was also made, did not make any difference. on admitted facts, it was clear that the assessee had concealed the particulars of income as well as given inaccurate particulars. we may also notice that in recent judgment of the hon'ble supreme court in union of india v. dharamendra textile processors (2007) 212 ctr 432 (sc): 2008 (13) scc 369, overruling the view taken in dilip n. shroff v. jt. cit : (2007) 210 ctr (sc) 228 : 2007 (6) scc 329, it was observed that parameters for determining criminal liability under section 276c were different from those applicable to determining civil liability for penalty under section 271(1)(c). the penalty provision was to provide remedy for loss of revenue for which element of 'wilful' concealment was not essential. it was observed that finding of tribunal could not be interfered with unless perverse. in the present case, the assessee has been convicted even in criminal proceedings. findings of the tribunal cannot be held to be perverse by any standard.7. the questions referred are, thus, decided against the assessee and in favour of the revenue.8. the reference is disposed of.