1990-VIL-83-ITAT-AHM

Equivalent Citation: ITD 036, 076, TTJ 040, 446,

Income Tax Appellate Tribunal AHMEDABAD

Date: 21.09.1990

HIMAT VALLANJI KARIA.

Vs

INCOME-TAX OFFICER.

BENCH

Member(s)  : K. R. DIXIT., R. M. MEHTA.

JUDGMENT

Per Shri K.R. Dixit (Judicial Member) --- This appeal raises an important question as to the extent of disclosure which in assessee is expected to make in his return. Penalty has been levied u/s. 271(1)(c). The quantum appeal has been decided by the Tribunal against the assessee.

2. Briefly, the issue is whether the assessee was bound to disclose the fact that he was in receipt of certificate u/s. 80RRA when he claimed the status of nonresident in his return.

3. In the statement of income the assessee stated

" Residence : Non-Resident

(See Annexure ' A ')"

Details have been given in Annexure-A showing dates of leaving India and dates of arrival in India from the years 1974 to 1978 which show inter alia that for the relevant previous year the assessee had stayed in India only for 137 days i.e., less than 180 days. He claimed salary received amounting to Rs. 1,15,444 as non-taxable as a result of his claim of status as non-resident. The Income-tax Officer noted that the assessee's stay in India during the preceding years was such as to satisfy section 6(1)(c) and concluded that the assessee was a non-resident not entitled to the exemption claimed. The assessee had obtained a certificate for exemption u/s. 80RRA whereby 50% of the income earned from the salary outside India is exempted. The Income-tax Officer noted that though the assessee had the certificate with him the same was not disclosed before him. The assessee's counsel has supplied the details from which it can be seen that the date of application of the certificate is 3rd April, 1978 and the date of its issue is 5-8-1978. The date of the assessment order is 31-3-1982. The assessee's explanation in response to the show cause notice was that all the particulars had been disclosed in the return and that the difference was only regarding the interpretation of the relevant section on status of the assessee as resident or non-resident. In the penalty order the Income-tax Officer held that since the assessee did not disclose the fact of the certificate under section 80RRA and his correct residential status although he knew about it there was a breach of the obligation under section 139(1) and therefore, he was guilty of concealment of income which was a default under section 271(1)(c). The Commissioner has agreed with the Income-tax Officer. In the assessment order it has been stated " the provisions of section 271(1)(c) were attracted because of the failure on the part of the assessee to furnish true and accurate particulars in regard to his status ".

4. The assessee's counsel argued that all the material facts were disclosed and so there was no concealment. He submitted that according to the assessee sub-clauses (a) and (c) of section 6(1) were to be considered cumulatively and not disjunctively as held by the Tribunal. He also pointed out that the Income-tax Officer had not given the relief under section 80RRA and that when the assessee had made the application for the certificates he did not know that he would return within 180 days of his departure.

5. The learned Departmental Representative on the other hand emphasised all the reasoning in the Income-tax Officer's order. He submitted that section 6 was very clear and there was no scope for the assessee to entertain any belief whatsoever that he was a non-resident and supported that submission by the Tribunal's order in quantum appeal. He further pointed out that clause (B) in Explanation-1 to section 271(1)(c) was applicable. He relied upon the following authorities :

1. CIT v. Gates Foam & Rubber Co. [1973] 91 ITR 467 (Ker.)

2. CIT v. India Sea Foods [1976] 105 ITR 708 (Ker.)

3. CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14/30 Taxman 546H (SC).

He submitted that penalty can be imposed in the case of a false claim and also where the explanation of the assessee was not accepted.

6. In the present case, the assessee's explanation has not been accepted by the Income-tax Officer. As rightly argued by the learned Departmental Representative that however does not mean that the penalty for concealment cannot be imposed. Looking to section 6(1)(a) and (c) it is quite plain that even if one of the clauses is satisfied the assessee would not be regarded as a non-resident. It cannot be disputed that the assessee's stay in India satisfied the requirement of clause (c). The assessee did not have to depend upon the Tribunal's order to come to that conclusion because the language of the section is quite plain. Further, the assessee's own application under section 80RRA gave an indication of what the assessee himself regarded his status to be. The assessee had obtained that certificate under that section before the assessment was made. Yet the assessee did not disclose it to the Income-tax Officer.

7. The question is what were the facts which the assessee was bound to disclose to the Income-tax Officer and what relevance did the assessee's own belief regarding his status have with it. It cannot be disputed that the assessee had fully disclosed all the material dates of arrival and departure in India for the past four years in Annexure-A to the statement of income. Although in that statement the assessee hid stated as above i.e. Residence : Non-resident. Immediately below that he has mentioned " see Annexure-A ". Therefore, the above statement i.e., non-resident cannot be read in isolation and separately from Annexure-A. Now, it was for the Income-tax Officer to come to the conclusion regarding the assessee's status. The conclusion by the Income-tax Officer or by the assessee regarding the status of the assessee may be one or the other but that does not mean that the facts had been concealed by the assessee. Concealment can only be of facts and not of the conclusion. Provided the assessee had disclosed all the material facts to enable the Income-tax Officer to come to a conclusion, it cannot be said that the assessee is guilty of concealment. It is the duty of an assessee to disclose all the facts and not to conceal any material fact which would give a false suggestion as to the conclusion to be drawn. This is the extent of the disclosure expected of an assessee. In other words, there should not be any suppressio veri which would amount to suggestio falsi. In the present case, the assessee has not done any such thing. Although the assessee had not disclosed the fact of his having the certificate under section 80RRA, strictly speaking, it was not his duty to do so before the Income-tax Officer because the Income-tax Officer had all the materials before him to enable him to come to a conclusion regarding the assessee's status. Ideally or morally speaking, it may be expected of the assessee to have made this disclosure. That is not the expectation of law when imposing penalty for which a positively dishonest conduct is necessary. The assessee's own belief in that regard is also immaterial because the conclusion to be drawn by the Income-tax Officer is independent of any belief that the assessee might have had. The authorities relied on by the learned Departmental Representative do not support the revenue's case because here it is not a case of not accepting the assessee's explanation but deciding whether the facts and evidence supplied by the assessee was sufficient to enable the Income-tax Officer to come to an independent conclusion or not. The assessee has not made a claim (unjustified though it may be) on the basis of any false statement of fact or suppression of facts. For the above reasons the penalty is cancelled and the appeal is allowed

 

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