R. SUDHAKAR AND G. M. AKBAR ALI, JJ.

JUDGMENT

R. Sudhakar, J. - The above Tax Case (Appeals), filed at the instance of the assessee as against the orders of the Income Tax Appellate Tribunal for the assessment years 2002-03 to 2008-09 raising the following substantial questions of law:

2. The brief facts are as follows:
The assessee was in the business of operating transport bus in Salem District. The assessee filed return of income for the assessment years 2002-03 to 2007-08 on various dates. On 06.01.2009, there was a survey under Section 133A of the Income Tax Act in the premises of the assessee and a statement was recorded with regard to the fixed deposits made by the assessee in Rasipuram Co-operative Urban Bank Limited, Rasipuram. On 13.1.2009, the assessee filed a letter with the Department stating that the deposits were all made out of the amount of Rs.20.00 lakhs he got from the family partition in the year 1977. The assessee had also stated that the said deposits were renewed along with the interest accumulated thereon. The assessee requested the Assessing Officer that he would collect the deposit details from the bank and file the returns. It is on record that at that time, the assessee was suffering from lung cancer. The Assessing Officer issued notices to the assessee under Section 148 of the Income Tax Act for the above-said assessment years. In response to the said notice, the assessee filed revised return of income, the details of which are as follows:

3. The assessments for all the above-said assessment years were completed and the revised returns filed by the assessee were accepted by the Assessing Officer without any addition. But the Assessing Officer initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act for concealment of income. Since the assessee was seriously ill, he filed a letter dated 09.04.2009 seeking time to file a reply. In the meantime, the assessee passed away on 27.5.2009. A reply letter was filed by the legal heirs of the deceased assessee on 25.6.2009 requesting the Officer to drop the penalty proceedings.

4. The Assessing Officer, while passing the order in respect of penalty under Section 271(1)(c) of the Income Tax Act took note of the reply given by the legal heirs of the deceased assessee on 25.6.2009 and came to hold that the assessee had filed the revised return only after the survey was conducted under Section 133A of the Income Tax Act. But for the survey, the assessee would not have disclosed the unexplained investment. Hence, the Assessing Officer held that the explanation offered by the legal representatives of the deceased assessee was not accepted and levied penalty under Section 271(1)(c) of the Income Tax Act in respect of the assessment years in question.

5. Aggrieved by the orders of the Assessing Officer, appeals were filed before the Commissioner of Income Tax (Appeals), who dismissed the appeals holding as follows:

"5. I have considered the penalty order and the submissions of the appellant. The only issue to be adjudicated is the levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961. All the grounds relate to the same issue.
5.1 The appellant, inter-alia, has relied the ratio of the apex court in the case of Commissioner v. Suresh Chandra Mittal in 241 ITR 124. The relevant portion is as below:

"We find ourselves in agreement with the view taken by the tribunal. It is well settled that under section 271(1)(c), the initial burden lies on the revenue to establish that the assessee had concealed the income or has furnished inaccurate particulars of income. The Burden shifts to the assessee only if he fails to offer any explanation or offers an explanation which is found to be false by the assessing authority. However, the Explanation 1, provides for the shifting of the burden again where the explanation offered by the appellant is found to be bonafide".

5.2 Considering the facts and circumstances of the case, the appellant would not have offered the income but for the detection of the same by the department. The appellants' explanation that, he was of the opinion that, as there was no TDS by the bank, he was of the opinion that filing of returns for the said fixed deposits and interest thereon, was not necessary, is not acceptable. The very fact that the appellant is aware of the TDS provisions itself would mean that the appellant was very much aware of the provisions of the Income tax act. The appellant has also not provided any evidence to the agricultural income of the family prior to the partition in 1997-97. The appellant explanation is only an afterthought and not bonafide."

6. Aggrieved by the order of the Commissioner of Income Tax (Appeals), the assessee filed appeals before the Income Tax Appellate Tribunal. The Tribunal rejected the contentions of the assessee and dismissed the appeals holding as follows:

"15. We find that the assessee had produced absolutely no material before us or before any of the lower authorities to show that the amount invested in FDRs in the years under consideration was renewal of the old FDRs and not fresh investment of the relevant years. The assessee, has even not filed copies of FDRs or any certificate from bank in support of his above submissions. In the absence of any such material, we find that the assessee's submission in this respect cannot be accepted being without any basis or material.

16. Further in the decision of the Amritsar Bench of the Tribunal in the case of ITO vs Fashionways (supra), it was held that where the assessee filed a revised return prior to the completion of the assessment wherein he corrected the earlier omission or mistake, for such mistake penalty u/s 271(1)(c) of the Act is not leviable. We find that in the instant case, the assessee could not produce any material before us to show that the subsequent returns filed by him in pursuance to notices u/s 148 were legal and valid revised returns u/s 139(5) of the Act. Therefore, the above decision is not applicable to the facts of the instant case.

18. We find that regular returns of income were filed in each of the years under consideration before the date of survey wherein full and true income was not disclosed by the assessee, but disclosed the same in the returns which were filed in pursuance to notices issued u/s 148 of the Act. We find that the assessee could not produce any bonafide reason for which correct income could not be disclosed in the regular returns filed u/s 139(1) or 139(4) or 139(5) of the Act. We, therefore, do not find any reason to interfere with the orders of the lower authorities. They are confirmed and the grounds of appeal of the assessee for the years under consideration are dismissed."

7. Aggrieved by the orders of the Tribunal, the present Tax Case (Appeals) have been filed by the assessee raising the substantial question of law referred supra.

8. Learned counsel appearing for the appellant placing reliance on the decision reported in (CIT v. Gem Granites [2014] 42 taxmann.com 493 (Mad.)), would contend that explanation offered by the assessee along with the details of the Fixed Deposits has not been considered by the Department. When once an explanation is submitted, the onus is shifted to the Revenue to come to a conclusion that the explanation is not acceptable and therefore the case falls under Section 271(1)(c) of the Income Tax Act. He further submits that the Assessing Officer without even considering the representation of the assessee dated 13.01.2009, levied penalty under Section 271(1)(c) of the Income Tax Act, which was confirmed by the Commissioner of Income Tax (Appeals) as well as the Tribunal. Hence, the order of the Tribunal confirming the levy of penalty has to be set aside.
9. Per contra, learned Standing Counsel appearing for the respondent placing reliance on the decision of the Supreme Court reported in (MAK Data (P.) Ltd. v. CIT [2013] 358 ITR 593/38 taxmann.com 448) would submit that the assessee should have given cogent and reliable evidence to establish that there is no concealment of income. In the instant case, the assessee has not proved with established evidence with regard to the investments made. Hence, the Tribunal is right in confirming the levy of penalty.

10. Heard learned counsel appearing for the appellant and the learned standing counsel appearing for the Revenue and perused the materials placed before this Court.

11. The core issue involved in the above appeals is whether penalty is leviable under Section 271(1)(c) of the Income Tax Act. Section 271(1)(c) reads as follows:
"271. Failure to furnish returns, comply with notices, concealment of income, etc.— (1) If the Assessing Officer or the Deputy Commissioner (Appeals) or the Commissioner (Appeals) in the course of any proceedings under this Act, is satisfied that any person--

(b) has failed to comply with a notice under sub-section (1) of section 142 or sub-section (2) of section 143, or fails to comply with a direction issued under sub-section (2A) of section 142, or
(c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,--

Explanation 1.— Where in respect of any facts material to the computation of the total income of any person under this Act,—

12. In the decision reported in Gem Granites (supra), this Court while dealing with the issue of penalty imposed under Section 271(1)(c) of the Income Tax Act held as follows:

"11. In a recent decision of the Hon'ble Supreme Court in Civil Appeal No.9772 of 2013, dated 30.10.2013 (Mak Data P. Ltd., v. Commissioner of Income Tax-II), the Hon'ble Supreme Court while considering the Explanation to Section 271(1), held that the question would be whether the assessee had offered an explanation for concealment of particulars of income or furnishing inaccurate particulars of income and the Explanation to Section 271(1) raises a presumption of concealment, when a difference is noticed by the Assessing Officer between the reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence and when the initial onus placed by the explanation, has been discharged by the assessee, the onus shifts on the Revenue to show that the amount in question constituted their income and not otherwise. Factually, we find that the onus cast upon the assessee has been discharged by giving a cogent and reliable explanation. Therefore, if the department did not agreed with the explanation, then the onus was on the department to prove that there was concealment of particulars of income or furnishing inaccurate particulars of income. In the instant case, such onus which shifted on the department has not been discharged. In the circumstances, we do not find that there is any ground for this Court to substitute our interfere with the finding of the Tribunal on the aspect of the bonafides of the conduct of the assessee".

13. From a reading of the above-said provision and the decision of the Supreme Court and this Court, it is clear that in the instant case there are some factors which have been overlooked by the Authorities below. The primary factor is that after the survey was conducted on 06.01.2009, the assessee, while he was alive, referring to the survey under Section 133A on 06.01.2009 and the issuance of summons, gave a detailed explanation on 13.1.2009 in vernacular language with regard to the investments as pointed out by the Assessing Officer. In the said letter, the assessee had stated that because of his terminal illness, frail health and memory loss, he could not produce all those documents and was producing the deposit receipts as annexure to the letter dated 13.1.2009. He further explained that out of a partition in his family in the year 1977, he received a sum of Rs.20.00 lakhs as his share. He was earning agricultural income from his own lands and leased lands. All those amounts were invested in a fixed deposit in Rasipuram Urban Cooperative Bank and the same is detailed in the list annexed to the letter. It is the further explanation that even the interest earned out of the deposits were re-invested in the deposits. It is the further explanation of the assessee that the details of every year's deposit and the interest earned thereon though not available immediately, would be collected and given shortly. He further explained that as on 31.3.2001, Rs.30 to 40 lakhs were available as deposit and the details of the said fixed deposits were filed along with the letter.

14. It is on record that after giving this explanation along with the documents, the assessee died on 27.5.2009. After the assessment order was passed in response to the notice, the legal heirs have filed a detailed reply giving the explanation reiterating in addition to what was submitted by the said N.R. Palanivel on 13.1.2009. Even in that reply, they have relied upon two decisions in the case of CIT v. M. Pachamuthu [2007] 295 ITR 502 (Mad.) and CIT v. Rajiv Garg [2009] 313 ITR 256/[2008] 175 Taxman 184 (Punj. & Har.).

15. It appears that some details were furnished in the form of explanation by the legal representatives of the deceased assessee, but we find from the proceedings by the Assessing Officer as well as the first Appellate Authority and the Tribunal that except adverting to the letter of the legal heirs of N.R. Palanivel, there is no discussion whatsoever as to the nature of explanation offered by the assessee and his legal heirs. All the Authorities have cursorily dismissed the explanation. It is not as if the explanation was submitted without details. It appears from record that some records were filed along with letter dated 13.1.2009. In such view of the matter, the assessee in this case had given some explanation which would fall within the parameters of Explanation B to Section 271(1)(c) of the Income Tax Act. If the Authorities have considered these issues in detail, probably, there would have been no case for the assessee. We find that in the instant case, reasonable explanation was offered by the assessee as to the fixed deposit prior to 31.3.2001 and the renewal of the fixed deposit with interest. He claimed it primarily as family income out of partition and agricultural income. Before an opportunity could be given to him to explain, he died on 27.5.2009. The legal representatives, however, made an attempt to convince the authorities but were not successful.

16. In the present case, we find that the explanation made on the basis of Explanation B to Section 271(1)(c) of the Income Tax Act to some extent has been satisfied by the assessee and the legal heirs of the assessee. The details given by the legal representatives of the assessee along with the annexures have to be considered by the Authority before ever it proceeds to invoke Section 271(1)(c). If the Authority still finds that the Explanation is not justified or reasonable, they are entitled to take a different view on the penalty proceedings. But when the assessee has given some reasonable explanation, it is incumbent on the part of the Authority to consider the same on its own merits before proceeding further. This exercise, we find, has not been done in the present case and consequently, the matter is remanded back to the Assessing Officer to consider the explanation after giving an opportunity to the legal representatives of the assessee in support of the representation dated 13.1.2009 and dt.25.6.2009 and thereafter proceed in accordance with law.

17. For the foregoing reasons, we pass the following order:

The order of the Tribunal insofar as confirming the penalty proceedings in respect of the assessment years in question stand set aside and the matter is remanded back to the Assessing Officer for fresh consideration.
18. In the result, the above Tax Case (Appeals) are disposed of. No costs. Consequently, connected miscellaneous petitions are closed.